User Account

All Pages

Prepare the initial journal entry to record the construction

Assignment Help Accounting Basics
Reference no: EM133103572

Question - Odom Enterprises Ltd. (OEL) completed construction of an investment property on November 30, 2020 (construction began earlier in 2020). The building was constructed for a total cost of $450,000.OEL leased the property to WS Inc. on December 31, 2020. OEL incurred $2,500 in legal costs to deal with the lease contract and lost $5,500 in operating costs before the lease to WS Inc. occurred. This lease is NOT considered a right-of-use lease for OEL.

OEL estimates that the building will have a 15-year useful life. At December 31, 2021, the building held a fair value of $515,000. OEL holds NO other investment properties and follows IFRS for reporting purposes.

Required -

a) Prepare the initial journal entry to record the construction (completion) of thebuilding. Explain how OEL should record the operating loss on the building.

b) Assume that OEL chooses to use the fair value method to classify the investment property. Prepare the journal entry to record the adjustment at December 31, 2021.

c) Assume that OEL chooses to use the cost value method to classify the investment property and uses the straight-line method of depreciation. Prepare the journal entry to record the adjustment for the year ended December 31, 2021.

d) Provide a recommendation (with support) to OEL on which method of recording the investment property it should use.

Reference no: EM133103572

Questions Cloud

Differentiate between the two types of budgets : Our textbook, Managing Accounting Concepts, describes 2 main types of budgeting: static budgets and flexible budgets. Differentiate between two types of budgets
Explain the purpose of the balanced scorecard : Explain the purpose of the balanced scorecard and identify two examples of nonfinancial measures that might be included in a balanced scorecard
What are the tax consequences to Monica : What are the tax consequences to Monica, Matt, and Crown if Matt purchases 75 shares of Crown stock for $600,000 and Crown redeems Monica's remaining shares
Journalize the transactions using perpetual inventory system : Norwich Hardware Store, Ltd. completed the following merchandising trans-actions in the month of May. Journalize transactions using perpetual inventory system
Prepare the initial journal entry to record the construction : Prepare the initial journal entry to record the construction (completion) of thebuilding. Explain how OEL should record the operating loss on the building
Determine the yield to maturity : The 15-year $1,000 par bonds of Vail Inc. pay 8 percent interest. The current market price for the bond is $1,080. Determine the yield to maturity
Define the terms salary and wages : Define the terms "salary" and "wages". Why do you think we use these two separate terms to describe employee payments
Determine the amount of factory overhead : Use this information to determine the amount of factory overhead that was applied to job A-1. Round to nearest whole number (no cents)
What are its costs and? benefits : If the change in sales is the only consequence of this? decision, what are its costs and? benefits? Is it a good? idea

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd